Effort to Return to DB Stalls in Alaska

March 1, 2010 (PLANSPONSOR.com) - Key legislators who control the future of the bills that would bring Alaska state workers back to a traditional defined benefit pension plan haven't moved them from their committees.

The Juneau Empire reports that State employee unions,
supported by members of the Juneau legislative delegation and others, have been
hoping to abandon the 401(k)-style retirement plan the Legislature adopted in
2005 and switch back to a defined benefit pension plan, and bills to do that
have been introduced in both the House and Senate. However, House Bill 30
remains in the House Labor and Commerce Committee, the first committee to which
it was referred since being introduced before the 2009 session, and the Senate
bill won approval in the Senate’s Labor and Commerce Committee and the
State Affairs Committee, before stalling in Finance.

While those in favor say a return to Public Employees
Retirement System Tier III and Teachers Retirement System Tier II will provide
better retirement at no additional cost, the state’s Department of
Administration said that doesn’t appear to be the case, according to the news
report. The pension plans left Alaska with a $7.5 billion debt it doesn’t know
how it is going to pay.

Former Juneau representative
Jim Duncan, now business manager of the Alaska State Employees Association,
says the state’s Tier I plan caused the high costs, but it has been
closed since 1986. The plans that were abandoned for the 401(k), TRS Tier II
and PERS Tier III, had solved the growing liability problem, he contended.

The 401(k) plan is known as Tier IV for public employees
and Tier III for teachers. Half of state employees are now under those plans,
the news report said.

Duncan said Alaska needs to go back to the old system for
the good of both state employees and the state itself. “The data shows
that defined contribution is not serving the state well, it has hurt both
recruitment and retention of employees,” he said.

Cindy Spanyers,
legislative liaison with the Alaska Public Employees Association/AFT, said
that’s the message she’s been getting reading through hundreds of exit
interviews with departing state employees. They’ve frequently mentioned the
retirement system as a reason for their departure, and a retiring petroleum
lands manager said the state should return to a defined benefit plan to hire
better people, she said, according to the news report.